Navigating the world of nanny taxes can be a complex and daunting task for both families and household employees. This comprehensive guide is designed to break down the intricacies of nanny and household payroll taxes, offering clarity and guidance to ensure a smooth and compliant process for all parties involved.

Section 1: Understanding the Basics

Do you have a household employee?

The IRS says, “You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done but how it is done. If the worker is your employee, then it does not matter whether the work is full time or part time nor that you hired the worker through an agency or from a list provided by an agency or an association. It also does not matter whether you pay the worker on an hourly, daily, weekly or by the job.”

What is household work?

Household work is work done in or around your home. Some examples of workers who do household work are:

• Babysitters

• Caretakers

• Cleaning people

• Domestic workers

• Drivers

• Health aides

• Housekeepers

• Maids

• Nannies

• Private nurses

• Yard workers

Household work doesn't include services performed by these workers unless the services are performed in or around your private home. A separate and distinct dwelling unit maintained by you in an apartment house, hotel, or other similar establishment is considered a private home. Services not of a household nature, such as services performed as a private secretary, tutor, or librarian, even though performed in your home, aren't considered household work.